Chinese Drywall Maker Loses a Round in Court

Remember Chinese drywall? It has been years since the contaminated building material began to make headlines in the United States, but the court battles over who should pay for the consequences continues to drag on.

Knauf Tianjin, the German-owned supplier of Chinese-manufactured drywall, has long since settled its court case and begun to pay for remediation of damaged homes. But another Chinese company, Taishan Gypsum, is continuing to stonewall plaintiffs. In May, Taishan lost another round in court, when the United States Court of Appeals for the Fifth Circuit ruled against Taishan's argument that U.S. courts should not have applied Florida legal standards to the Chinese company.

Jurisdiction is a common battleground in product liability cases, and the issue of "choice of law" — the question of which state's legal standards apply to any given dispute when there's international or interstate commerce involved — often comes up. The example of Taishan's faulty drywall may be of passing interest to attorneys who specialize in that kind of issue. For reference, court's latest decision can be found here (see: "In Re: Chinese-Manufactured Drywall Products Liability Litigation").

But for builders or homeowners whose homes have been damaged by emissions of corrosive sulfurous gas from the drywall, the legal dispute's main significance is that it takes up time. Whatever courts may ultimately rule, continuing delays mean continuing suffering for the victims of the faulty material. And at this point, regardless of any ruling, there's no assurance that aggrieved homeowners or contractors will ever be able to collect any money from Taishan Gypsum.

The dollar amounts attached to the original drywall shipments themselves are surprisingly small. For example, the court notes, "Taishan sold 200,000 sheets of its drywall to Florida customers or customers doing business in Florida and made almost $800,000 from these sales." The Louisiana sales were less: "Taishan sold at least 45,756 sheets of drywall that ended up in Louisiana and earned Taishan $195,915.29," the court opinion states.

But the corrosive emissions from 150 sheets of defective Chinese drywall, installed, can ruin a million-dollar home — destroying wiring, air-conditioning equipment, and electronic gear and causing respiratory irritation for residents. If there's a lesson for builders, maybe it's this: Think twice before you take advantage of an attractive price on a building material from an unfamiliar source. With liability for the builders soaring into the millions, a dollar or two savings per sheet of drywall has turned into a very bad bargain for many Florida, Louisiana, and Virginia builders.